First, the better measure of a strong labor market is the proportion of the
population that is working, not the proportion that isn't. ... By this
measure, the labor market's health has barely changed over the past three
years.

Second... Every time the unemployment rate changes, analysts and reporters
try to determine whether unemployment changed because more people were
actually working or because people simply dropped out of the labor market
entirely, reducing the number actively seeking work. The employment
rate—that is, the employment-to-population ratio—eliminates this issue by
going straight to the bottom line...

While the unemployment rate has fallen over the past 3½ years, the
employment-to-population ratio has stayed almost constant at about 58.5%,
well below the prerecession peak. ...

The U.S. is not getting back many of the jobs that were lost during the
recession. At the present slow pace of job growth, it will require more than
a decade to get back to full employment defined by prerecession standards.
...

No problems so far, but the next part goes off the rails:

Why have so many workers dropped out of the labor force and stopped actively
seeking work? Partly this is due to sluggish economic growth. But research
by the University of Chicago's Casey Mulligan has suggested that because
government benefits are lost when income rises, some people forgo poor jobs
in lieu of government benefits—unemployment insurance, food stamps and
disability benefits among the most obvious. ...

These disincentives to seek work may also help explain the unusually high
proportion of the unemployed who have been out of work for more than 26
weeks. ...

If the Mulligan story doesn't hold, then the conclusion about QE below
doesn't hold either (notice the qualifier "may" in Lazear's statement
"disincentives to seek work may also help explain the unusually high proportion
of the unemployed")

The Fed may draw two inferences from the experience of the past few years.
The first is that it may be a very long time before the labor market
strengthens enough to declare that the slump is over. The lackluster job
creation and hiring that is reflected in the low employment-to-population
ratio has persisted for three years and shows no clear signs of improving.

The second is that the various programs of quantitative easing (and other
fiscal and monetary policies) have not been particularly effective at
stimulating job growth. Consequently, the Fed may want to reconsider its
decision to maintain a loose-money policy until the unemployment rate dips
to 6.5%.

We don't know what job growth would have been without fiscal policy and QE --
it could have been even worse (as many econometric examinations imply).

Why am I skeptical about the claim above? There's no evidence that I'm aware
of that shows conclusively (or at all) that the supply of workers rather than
the demand for workers is the problem. That is, with the ratio of the number of
people seeking jobs to the number of available jobs so high, how is it that jobs
are going unfilled due to social insurance programs? Do we see, for example,
wages rising as firms have trouble finding workers (because they are all
enjoying the meager benefits they get so much that there is a shortage)?

Maybe I'm missing something, but if no jobs are going unfilled, then how are
social insurance programs holding back the recovery rather than making life a
bit less miserable for those who cannot find work?

First, the better measure of a strong labor market is the proportion of the
population that is working, not the proportion that isn't. ... By this
measure, the labor market's health has barely changed over the past three
years.

Second... Every time the unemployment rate changes, analysts and reporters
try to determine whether unemployment changed because more people were
actually working or because people simply dropped out of the labor market
entirely, reducing the number actively seeking work. The employment
rate—that is, the employment-to-population ratio—eliminates this issue by
going straight to the bottom line...

While the unemployment rate has fallen over the past 3½ years, the
employment-to-population ratio has stayed almost constant at about 58.5%,
well below the prerecession peak. ...

The U.S. is not getting back many of the jobs that were lost during the
recession. At the present slow pace of job growth, it will require more than
a decade to get back to full employment defined by prerecession standards.
...

No problems so far, but the next part goes off the rails:

Why have so many workers dropped out of the labor force and stopped actively
seeking work? Partly this is due to sluggish economic growth. But research
by the University of Chicago's Casey Mulligan has suggested that because
government benefits are lost when income rises, some people forgo poor jobs
in lieu of government benefits—unemployment insurance, food stamps and
disability benefits among the most obvious. ...

These disincentives to seek work may also help explain the unusually high
proportion of the unemployed who have been out of work for more than 26
weeks. ...

If the Mulligan story doesn't hold, then the conclusion about QE below
doesn't hold either (notice the qualifier "may" in Lazear's statement
"disincentives to seek work may also help explain the unusually high proportion
of the unemployed")

The Fed may draw two inferences from the experience of the past few years.
The first is that it may be a very long time before the labor market
strengthens enough to declare that the slump is over. The lackluster job
creation and hiring that is reflected in the low employment-to-population
ratio has persisted for three years and shows no clear signs of improving.

The second is that the various programs of quantitative easing (and other
fiscal and monetary policies) have not been particularly effective at
stimulating job growth. Consequently, the Fed may want to reconsider its
decision to maintain a loose-money policy until the unemployment rate dips
to 6.5%.

We don't know what job growth would have been without fiscal policy and QE --
it could have been even worse (as many econometric examinations imply).

Why am I skeptical about the claim above? There's no evidence that I'm aware
of that shows conclusively (or at all) that the supply of workers rather than
the demand for workers is the problem. That is, with the ratio of the number of
people seeking jobs to the number of available jobs so high, how is it that jobs
are going unfilled due to social insurance programs? Do we see, for example,
wages rising as firms have trouble finding workers (because they are all
enjoying the meager benefits they get so much that there is a shortage)?

Maybe I'm missing something, but if no jobs are going unfilled, then how are
social insurance programs holding back the recovery rather than making life a
bit less miserable for those who cannot find work?